Online Payment Processing Fraud Prevention

Regular readers know full well that, as far as fraud prevention goes, card-not-present transactions are much more challenging in that they are very different from the ones that businesses operating in a face-to-face setting face. Because online payment processing is by definition done in the virtual world, the business never gets to see and examine either the card or the customer.

There are, however, a great number of services and best practices that, if implemented consistently and followed scrupulously, will help direct marketing merchant account users and their e-commerce counterparts limit fraud and improve their bottom line.

Online Payment Processing Fraud Prevention Guidelines

If you accept credit cards in a non-face-to-face environment, implement the following
suggestions when processing each of your transactions:

• Obtain authorization approvals for all transactions. The floor limit for all non-face-to-face transactions is zero and that means that you need to receive an authorization approval for every single one of them, regardless of the transaction amount.
• Get the expiration date. Always have your customer to provide her card's expiration date. This is used as a way to verify that the customer is in a physical possession of her card during the time of the transaction.
• Get the card security code. Card security codes are the 3- (for MasterCard, Visa and Discover cards) and 4-digit (for American Express cards) non-embossed codes on the back (for MasterCard, Visa and Discover) or the front of a bank card (for American Express). Having the card security code in a non-face-to-face transaction is another and very powerful way to validate that your customer is in physical possession of her card. Keep in mind that you should never save the card security codes anywhere in your system. It is forbidden by the Credit Card Networks and violators, if caught, will be assessed steep fines.
• Use the Address Verification Service (AVS). The (AVS) enables card acceptors to validate the authenticity of the billing address that a customer has provided at the checkout. It does that by sending the provided address, through the Credit Card Networks, to the card's issuer. The issuer then compares the submitted address to the one it has on file for its own cardholder and responds by issuing a response code that details the result of its investigation.

Implementing the above mentioned fraud prevention services and procedures will help minimize fraud and limit chargebacks. Contact your online payment processing provider if you need additional information or help.